January Dip in EV Sales Due to Low Inventory

Sales of electric vehicles, like the Nissan LEAF, shown here, dropped precipitously in January. Yet the culprit has much more to do with a lack of cars to sell, than any worries about consumer interest in EVs.

January is one of the meaner months of the year, at least if you’re an automaker. With consumers either digging their way out of holiday season debt, or piles of snow, the first month of every New Year routinely ushers in a temporary drop in automobile sales. Yet the dawn of 2013 appears to have been particularly hard on sales of electric vehicles. The Nissan LEAF electric car and Chevrolet Volt plug-in hybrid recording sales drops of 56 and 57 percent from December levels, respectively. For comparison’s sake: sales of all vehicles in the U.S. fell by approximately 23 percent from December 2012 to January 2013.

Reasons

Don’t count the EV market as down for the count. A number of fairly mundane factors have contributed to the sales lull, including a lack of dealership inventory and the arrival of new, less expensive trim levels. At this year’s Detroit Auto Show, Nissan announced the entry-level price of the LEAF would drop by more than $6,000. The entry-level price of the 2013 LEAF S now rings in at $28,800—before factoring in federal and state tax incentives. In another first, assembly of the new LEAF has begun at Nissan’s plant in Smyrna, Tenn.

But getting the car to dealerships takes time and, during the wait, sales are bound to fall. “I'm certain the sales drop off is due to lack of available stock to sell,” says Paul Scott, an EV activist turned salesman at Santa Monica Nissan. “I can speak to my dealership's lack of sales because we had five LEAFs at the beginning of the month and they all were gone within the first ten days. Since I only sell the EV, I've been spending my time creating a list of buyers for the 2013 model. There is a lot of interest in the improvements to the LEAF and especially the new low cost S model.”

Scott forecasts a “dramatic increase in February numbers,” provided he has cars to sell. “If we don't get the cars until mid-month, that might prevent us from selling very many during February, so then you'd see the uptick in March's numbers.”

Volt sales dropped by more than 50-percent from December 2012, to January 2013.

Volt Inventory Is Low Too

A lack of available cars is also affecting sales of the Chevrolet Volt plug-in hybrid. “Volt sales were down for the month compared to December of 2012 due to extremely low availability in California and the tax credit pull-ahead effect,” said G.M. spokeswoman Michelle Malcho. “California continues to be Volt's largest market. We expect Volt to continue its leadership position as being the best-selling plug-in sold in America as we expect our competitors to be down as well.” In other words, Chevrolet isn’t panicking about Volt sales because the competition has experienced a similar drop. The key now is getting electric cars onto dealership lots and, from that point, getting the keys to EVs into car buyers’ pockets.

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Comments

Are there any articles out there or in the works on what it takes to qualify for the entire $7500 US tax break and California $2500 tax break for an EV?

What I've read kind of runs the gamut. Some say you need to be a millionaire. Others say it cancels out all your other deductions and replaces them. How does it mix with the standard deduction of ~$11,000?

When I first read that low inventory was to blame for low January sales I was skeptical. Now I'm convinced - at least for the Leaf.

For us, our leased-in-November Leaf has been a huge success. So much that with 4 drivers who treat our cars as a shared pool - rather than each having his/her own designated car - the Leaf has far and away been the most used car and we are ready to acquire a second one.

And there is where I was surprised. In November there was a glut of Leafs and huge discounts. December and early January were even better times to lease (the incentives were aimed more at leases than sales). But new Leafs stopped arriving and the inventory is now dry. I've even looked at nearby states and finding most of them barren - maybe 1 Leaf at most.

So, we'll wait 4-5 months to see if the mania over the 2013 Leaf dies down.

Regarding the above, the US tax credit is $7500 for any electric car. You take it when you file your tax return. If you have less than $7500 in US taxes it rolls over to the next year, and so on.

State credits vary by state. In Colorado I've seen dealers and even Nissan advertise a $6000 credit, but if you go to the state web site you find that the 2012 Leaf only qualified for slightly under $5000 ($6000 was the upper limit - all Telsa's qualify for that). The Colorado credit is taken in one year - you get a refund if you don't have that much state tax.

For Leases the federal credit is taken by the manufacturer (or whoever owns the lease) - make sure your lease price reflects that. Again, states vary. In Colorado, a change in December means that for 2012 and later people who lease an electric car can take a portion of the credit - basically the difference between the initial price of the car and the residual value at the end of the lease - as their credit. The remainder goes to whomever buys it afterwards, in the rare case where they are aware of this and remember to do so.